Here’s How Many Billions Wall Street Expects From Apple Watch
SAN DIEGO (TheStreeT), March 9: Though Apple has yet to sell a single Apple Watch, analysts have high hopes for the wearable device, with some expecting it to be the best-selling new product in Apple’s history. Estimates, however, are all over the map, partly because specifics around pricing and the launch are unclear.
Some of the uncertainty will be cleared up Monday when Apple hosts its “Spring Forward” event at the Yerba Buena Center in San Francisco. First unveiled in September, the Apple Watch is expected to be the focal point of Monday’s affair, and company watchers will look for new details on watch models and pricing, applications and the formal release date.
For Apple’s fiscal 2015, which ends in September, analysts’ estimates for Apple Watch-related revenue range between $1 billion and $7 billion. For fiscal 2016, estimates range from $6 billion to $19 billion. According to Piper Jaffray analyst Gene Munster, who sees an overall average selling price of between $550 and $600, Apple can sell 8 million devices in the 2015 calendar year for between $4 billion and $4.8 billion in revenue. By comparison, Apple generated $1.84 billion in iPhone-related revenue in fiscal 2008, the first full year it was available.
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Research firm Oppenheimer, which is admittedly optimistic on the watch’s market potential, finds itself sandwiched in the middle. The firm expects device sales of around 6 million units and revenue of $3.3 billion during fiscal 2015, and is even more positive about the future. “We believe in the long-term, when display and input challenges are overcome, the Watch will likely replace the smartphone as the primary mobile computing device,” Oppenheimer analyst Andrew Uerkwitz wrote in a recent note.
Not all are sold just yet on such an ambitious vision. Up for debate is whether the watch will be a must-own device for the masses or just a fancy new toy for Apple’s most loyal followers.
Apple will sell the watch in three lines: Apple Watch Sport, Apple Watch and Apple Watch Edition. Sport is likely to be the base model with prices starting at $349, but exact pricing on the other two lines is still to be determined. Piper Jaffray’s Munster estimates the mid-level Apple Watch will sell for $499 to $549 and expects that the Apple Watch Edition will start at $4,999.
“[Apple] will sell a few million [watches] just because it is Apple’s shiny new product,” Van Baker, a research analyst at Gartner, said. “The challenge will be to continue to sell the Apple Watch after the fan boys have bought it. It will be a couple of quarters before we really know what the sustainable sell through rate will be.”
Apple has asked suppliers to make as many 6 million watches for the first quarter after launch, with half the orders allocated to the Sport model, according to The Wall Street Journal.
As it stands, wearable technology is still something of a mystery.
Research firm Canalys reported that manufacturers shipped 4.6 million smart wearable bands in 2014, with Android Wear devices, which run the watch operating system developed by Google , accounting for 720,000 shipments. Things are expected to change dramatically in the next few years, however. Research firm Gartner predicts the entire wearable technology market would see 68.1 million units shipped in 2015, with smartwatches accounting for nearly a third of those sales, at 21 million. By 2020, the wearables market is expected to be worth $27 billion with around 400 million wearable devices sold that year, according to market-research firm Ovum.
DAILY FREEMAN